The slow growth rate of the current economic expansion has been well documented. Only once in the past ten quarters has the domestic economy grown faster than the 3% long-term average. Yet for all the hand-wringing about if, or when, business activity will finally hit its stride, companies have reaped rewards of the measured acceleration in the form of higher profits.

The tepid pace has allowed companies to meet demand without taking on costly investments for additional capacity and machinery. As the chart shows, subdued capital expenditures (capex) have helped protect margins even though pricing power has been soft for many industries.